Karl Marx

[The Industrial and Commercial Crisis]

[“Neue Oder-Zeitung” No. 17, 11 January 1855]

London, 8 January. While the clubs and journals here are busy with pretentious gossip about “ministerial crises,” they find no time to recognise the incomparably more important fact that one of the great English industrial and commercial crises has broken out again, and in more calamitous dimensions than in 1847 and 1836. This realisation, which the bankruptcies breaking out sporadically for three months and lately increasing in number and intensity were unable to produce, has at last become inescapable in consequence of the publication of the annual trade reports and the lists of exports and imports for the last eleven months issued by the Board of Trade <Handels- und Verkehrsministerium>. From the latter lists it follows that exports have fallen by £1,710,677, if compared with the corresponding eleven months of 1853, and by £1,856,988, if the last month alone — 5 November to 5 December — is compared in both years. From the export lists we extract the following details, which show the shortfall in some of the most important branches of industry:

                    1853         1854
                      £            £
Cotton manufactures  23,757,155   22,877,050
Cotton yarn           6,322,639    6,055,640
Linen manufactures    4,379,732    3,735,221
Linen yarn            1,069,812      852,763
Woollen manufactures  9,470,413    8,566,723
Silk manufactures     1,492,785    1,144,506
Machinery exports     1,368,027    1,271,503

In the trade reports, an attempt is naturally made to blame the war for the crisis of 1854, just as the Revolution of 1848 was blamed for a crisis that had already broken out in 1847. This time, however, even the London Economist — which as a matter of principle is wont to explain crises by accidental circumstances extraneous to trade and industry — is forced to admit that the commercial failures and shortfalls of 1854 are the beginning of a natural reaction against the “convulsive prosperity” of 1853. In other words, the commercial cycle has again reached the point where overproduction and over-speculation turn into crisis. The best proof: the United States of North America, which were affected by the Eastern war only insofar as it gave an unprecedented boom to their shipbuilding and shipping trade and provided a market for some raw materials that were previously supplied more exclusively by Russia. In the United States the crisis has already lasted longer than four months and is still steadily growing, although out of 1,208 banks, 107, i.e. roughly a twelfth, have already failed, and such a stagnation of industry, combined with such a reduction of wages, has set in in the industrial states of the East that last month over 4,000 European immigrants have “re-emigrated” back to Europe. The English crisis of 1836 was followed by the American crisis of 1837. This time the course is reversed. America has taken the initiative in bankruptcy. The United States and Australia are alike flooded with English products. The importance of this for English trade may be gauged from the fact that of the roughly £100 million in goods which Great Britain exported in 1853, £25 million went to the United States and £15 million to Australia. After the United States and Australia, East India was the most important market. East India, however, was already so overstocked in 1852 that only a completely new extension of trade through the Punjab and Sind to Bukhara, Afghanistan and Baluchistan, and from there on the one side to Central Asia, on the other to Persia, was able with difficulty to maintain exports at the old level of £8 million. Now all the outlets there are so choked up that goods were recently shipped from Hindustan to Australia, thus carrying “owls to Athens.” The only market that was for a time supplied “cautiously” as a result of the Eastern war was the Levantine market. Meanwhile it is an open secret in the City that, since the crisis in the United States and the stagnation in Australia forced trade to cast about anxiously for any markets not yet overstocked, Constantinople has become the depot for all goods needing buyers and must now also be regarded as “closed.” Similarly, the recent disturbances in Spain have been used to introduce, by way of smuggling, as many English goods as it can hold. The latest attempt of this kind is now being made in the South American states, whose small capacity for consumption, however, needs no demonstration.

Given the decisive importance of the English crisis for the social and political conditions of the entire world, it will be necessary to return in greater length and in detail to the history of English trade in 1854.

[“Neue Oder-Zeitung” No. 19, 12 January 1855]

London, 9 January. The growth of English trade and English industry in the period from 1849 to 1853 may be judged from the following figures. In 1846 the tonnage of vessels laden with goods entering and leaving British seaports amounted to 9,499,000; in 1850 this quantity had grown to 12,020,000 tons, and in 1853 to no less than 15,381,000, exactly double the tonnage of 1843. In 1846 the value of the exports of British manufactures and raw materials was £57,786,000; in 1850, by contrast, £71,367,000; and in 1853 over £98,000,000 — thus more than double the total exports of 1842. What part do the United States of North America and Australia play in this increase of exports? In 1842 the value of British exports to Australia was not yet £1 million; in 1850 they reached nearly £3 million, and in 1853 even £14,513,000. In 1842 exports to the United States were £3,582,000; in 1850 nearly £15 million; and in 1853 no less than £23,658,000. From these figures it follows, firstly, that the year 1854 constitutes a turning point in modern commercial history entirely analogous to the years 1825, 1836 and 1847; secondly, that the crisis in the United States is merely a moment of the English crisis; and finally, that the war of 1854 — which the “Pays” <in the “Neue Oder-Zeitung”: the “Patrie”>, Journal de l’Empire, very rightly describes as une guerre pacifique <a pacific war> — has exerted absolutely no influence on this social catastrophe, or if any, at most a retarding, restraining one. Individual branches of industry, e.g. the leather, iron and woollen goods manufactures, and also shipbuilding, were directly assisted by war demand. The alarm caused by a declaration of war after forty years of peace momentarily paralysed the flight of speculation. The loans raised by the various European states as a result of the war kept the rate of interest at a level which checked over-hasty industrial enterprise and thus held up the crisis. But, says the Peace Society, has not the war raised corn prices? Is not the rise in corn prices tantamount to a decline in domestic trade, i.e. of British consumption of industrial products? And is not this contraction of the home market the chief element of the crisis? — First of all, let it be recalled that the year of greatest British prosperity — 1853 — was a year of high corn prices, and that the corn prices of 1854 on average rank below those of 1853, so that 1853’s prosperity can as little be explained by the level of corn prices as the symptoms of the crisis in 1854. But, leaving aside the influence of corn prices on industry, what was the influence of the war on corn prices? In other words: Have corn prices risen because supplies from Russia have fallen off? Of the total corn and flour imported by Great Britain, roughly 14 per cent falls to Russia, and since total imports satisfy only about 20 per cent of national consumption, Russia supplies some 2 1/2 per cent of national consumption. The latest official report on the comparative imports of corn and flour from different continents and countries into Great Britain was published at the beginning of November 1854, giving a comparative table for the first nine months of 1853 and 1854. According to this, total wheat imports in 1853 amounted to 3,770,921 quarters, of which 773,507 were from Russia, and 209,000 qrs were drawn from Moldavia and Wallachia. Total flour imports amounted to 3,890,746 cwt, of which 64 came from Russia and none at all from the Danubian Principalities. In the war year 1854, Great Britain received from Russia 505,000 qrs of wheat and from Moldavia and Wallachia 118,000 qrs. No one will wish to maintain that this shortfall (moreover made up for by larger imports of flour from other countries) shot the prices of the excellent harvest of 1854 roughly up to the level of the bad years 1852 and 1853. On the contrary. The disappearance of all Russian grain would have failed to produce such an effect. What remains puzzling — though insignificant for the economic question — is the shortfall in supplies from the Danubian Principalities. — The riddle is easily solved. If the Coalition blockaded the Russian ports in the Black Sea nominally, it, on the other hand, blockaded first the Bosporus, then the mouth of the Danube in reality — blockaded, instead of Russia, Turkey and the Danubian Principalities. The Russian crusades against the Crescent — 1812, 1828, 1848 (at that time ostensibly against the rebels of Jassy and Bucharest) and 1854 — who does not know that they were conditioned in part by the commercial competition of the South Russian provinces against the Danubian Principalities and incidentally against the trade of Bosnia, Serbia and Bulgaria carried on along the Danube? What genius, therefore, on the part of an English ministry, to punish Russia by leaving the trade of Odessa and Taganrog free, but suppressing and blockading that of the Russian competitors on the Danube, and thus cutting off its own supplies.

[“Neue Oder-Zeitung” No. 33, 20 January 1855]

London, 16 January. The London Economist remarks with reference to the present commercial and industrial crisis:

“Whatever the decline in the exports of other articles may be, it does not extend to machinery. Instead of falling, the value of machinery exports has increased for 1854, compared with 1853. Other countries, therefore, are now making use of our machinery. In this respect we no longer possess any advantage over them. France, Germany, Belgium, Holland, Switzerland, and the United States are all now great manufacturing countries, and some of them possess advantages over us. We have a race to run, and we cannot do so successfully if we tie our legs together. Experience has convinced everyone that the restrictions devised for the benefit of the landlord have harmed himself; that the restrictions devised in favour of the factory lords have turned against themselves; and, by and by, the factory workers will also discover that the legal restrictions existing for their benefit can only harm them. It is to be hoped, however, that they will discover this before the above-mentioned countries have made such progress as to be able to exclude England from their own and third markets and to reduce our factory workers to the most extreme misery.”

Mr. Wilson, the editor of the *Economist* and the factotum in the Treasury of the anointed and unctuous Gladstone, apostle of liberty and place-hunter rolled into one, a man who on one column of his paper denies the necessity of the state in general and on another proves the indispensability of the coalition ministry in particular – this Mr. Wilson, then, begins his homily with a deliberately falsified fact. The export lists for 1854 in fact contain a double rubric on machinery exports. The first, relating to locomotives for railways, shows that goods to the value of £443,254 were exported in 1853, but of £525,702 in 1854, which is certainly an increase of £82,448. The second rubric, on the other hand, which includes all machinery used in factories, in short every other sort of machinery besides locomotives, shows £1,368,027 for 1853 against £1,271,503 for 1854, that is, a decrease of £96,524. If both rubrics are combined, the result is therefore a decrease of £14,076. This detail characterises the gentlemen of the Manchester School. They consider the present moment appropriate for abolishing the “restriction” that exists in favour of the factory workers, namely the legal limitation of working hours for young persons under 18, for women, and for children under 12. To attain so lofty an aim, one may surely falsify a few figures. But according to the *Manchester Examiner*, the special organ of the Quaker Bright, and all the trade circulars from the factory districts, the foreign markets, the customary outlets for the surplus of our manufactures, are groaning under the weight of our overproduction and over-speculation. If such a glut of the world market has been attained despite the improvisation of two new golden markets – Australia and California –, despite the electric telegraph, which has transformed the whole of Europe into a great commercial bourse, despite railways and steamships, which have increased communication, hence exchange, to an incredible degree – how long would the crisis have been in coming, had the manufacturers been free to work 18 hours instead of 11? The sum is too simple to need a solution. The relative hastening of the crisis, however, would not have been the only difference. A whole generation of workers would have lost 50 per cent in physical strength, mental development, and viability. The same Manchester School that will reply to this misgiving with:

Should this torment torment us,
Since it increases our pleasure?
<Goethe, “An Suleika”>

roars with sentimental lamentation over the human sacrifices that the war with Russia, that every war, costs! We shall hear Mr. Cobden at Leeds in a few days, protesting against the mutual slaughter of Christian people. We shall hear him in Parliament in a few weeks, protesting against the “restrictions” that impede the over-rapid consumption of human children in the factories. Does he regard only one of all heroic deeds as justified – that of Herod?

We agree with the Manchester School that legal compulsory limitations of working time do not exactly denote a high stage of social development. But we find the fault not in the laws, but in the conditions that make them necessary.

["Neue Oder-Zeitung" No. 41, 25 January 1855]

London, 22 January. It is known that the Chancellor of the Exchequer Robinson opened the Parliament of 1825 with a dithyramb on the unheard-of upswing of trade and industry. A few weeks later, the Bank of England was on the point of suspending its cash payments. Since that time, Robinson retained the nickname “Prosperity-Robinson” hung on him by Cobbett. As people in England like historical precedents, Prosperity-Robinson could not avoid finding successors. The Speech from the Throne with which the last extraordinary parliamentary session was opened congratulated the country upon the extraordinary state of prosperity in agriculture, manufacturing, and commerce. And yet even the
semblance
that might have blinded Robinson had already vanished. Ministerial congratulations seem to belong to the ceremonial by which convulsions of the world market are conventionally announced in England. More peculiar, however, than the language of the ministers at this moment is the silence of the press. Does it believe it can “burke” <“suppress”> the commercial crisis, as books that are disliked are “burked” in the literary coteries of Paris – by a conspiracy of silence? Meanwhile the price lists are speaking, the bankruptcy lists in the “Gazette” are speaking, and the letters of “commercial friends” are speaking. The newspapers will soon be speaking, too. In the last week, very significant stoppages of payment took place in the City, the most significant being those of Messrs. Lonergan & Co., involved in the Spanish and West Indian trade; those of Messrs. Rogers, Lowrey, who did business with Manchester and the surrounding factory district; those of Messrs. Kotherington & Co., belonging to the American trade; and finally that of the brothers Aubertius, an old and respectable firm. The liabilities of these various houses are said to average between £100,000 and £150,000. For this week, new stoppages of payment on the part of at least 7 significant houses in the City are expected.

From a commercial letter from Birmingham of 20 January we gather the following details on the state of the South Staffordshire industry:

“With the exception of the iron-industry houses that are producing war material on government orders, very few have any orders at all, and those they have are at extremely reduced prices. £8 10s. now buy a ton of bar iron that was quoted at £12 in the middle of summer, but even at these reduced prices sales are scarcely to be effected, so that production must be restricted. Few of the great interests of the United States of North America have suffered more from the commercial crisis there than the iron business. Almost all the large ironworks of the United States, on which enormous sums have been expended, have thrown their workers on to the streets, and this without any prospect of soon resuming work. America’s consumption of iron must therefore be considered as almost entirely suspended, and we have no further orders to expect from there.

Last Saturday many workers were dismissed from the (Birmingham) tin factories, and still more will follow on this evening (20 January). The ore and brass workers are no better off, as here in most large works only short hours are being worked.

In fancy goods, the orders still on hand are very scanty, and the commercial travellers who are seeking orders for spring in this branch are sending home very discouraging reports.

The state of the money market continues to have a disturbing effect on all branches of trade. The banks are screwing tight in a most detrimental manner, and at this moment only one business is going well, that of the money-lender. The small loan offices are thronged with applicants, and the bill discounters are reaping a fine harvest.”